Townsend Forms Hedge Fund as Partnership With Hill Ends

Feb. 14 (Bloomberg) -- Gary Townsend, the former bank
analyst and co-founder of Hill-Townsend Capital LLC, formed his
own hedge fund after winding down the firm he started with
Vernon Hill.

GBT Capital Management LLC plans to raise $100 million over
three years to invest in financial firms, as well as markets
such as Europe and Japan, Townsend said today in an interview.
Townsend said he’s signed up partners, whom he didn’t name.

Townsend, 62, spent much of his career specializing in
financial industry investments and plans to stick with the
sector, which has trailed the broader Standard & Poor’s 500
Index since the end of 2008. He’s a former analyst with Friedman
Billings Ramsey & Co. and served as chief examiner of the
Federal Home Loan Bank System, according to his profile on
LinkedIn Corp.’s website.

“I continue to be very interested in the financials, which
I think has further room to go on the upside,” Townsend said.
Markets such as Europe and Japan offer attractive valuations
along with monetary easing by regulators, he said.

GBT Capital will be a macro long-short hedge fund based in
Chevy Chase, Maryland, and expects to raise $50 million this
year, Townsend said. The new fund was reported earlier by
American Banker.

Current Picks

Townsend said he favors lenders that can increase market
share through internal growth, and undervalued money-center
banks because of their diverse operations such as New York-based
JPMorgan Chase & Co., which he views as being among the best-run. New York-based Citigroup Inc. will benefit when emerging
markets recover, he said.

Among smaller firms, Townsend said he likes New York-based
Signature Bank, which he helped take public in 2004. He cited
the bank’s high growth and low overhead costs.

Townsend started Hill-Townsend in 2007 with Hill, 68, who
founded New Jersey-based Commerce Bancorp Inc. and later sold it
to Canada’s Toronto-Dominion Bank.

The firm’s hedge funds were wound down early last year,
Townsend said. The split with Hill wasn’t caused by any
disagreement, he said, adding he might work with Hill again some
day. Hill couldn’t immediately be reached for comment.